Residential property sales market increased last month, thanks in part to the stamp duty extension, new figures reveal.
According to the RICS Residential Market Survey for March 2021, monthly property price growth registered a net balance of +59% last month, up from the +52% reported in February.
The March 2021 RICS UK Residential Survey results show sales market activity picking up sharply over the month, with indicators on enquiries, sales and new instructions all improving year-on-year. But some commentators feel that the recent pick-up in the housing market may be short-lived
Analyst Anthony Codling, of PropTech platform Twindig, said: “It is telling that the latest RICS UK residential housing market survey highlights the extension of the stamp duty holiday as a significant driving force behind the renewed momentum of the housing market.
“Housing market activity and prices had started to decline as the stamp duty deadline approached, but the stamp duty holiday extension was a shot in the arm for the UK housing market.
“Short-term stimulus packages do not provide the answer to the long term nature of the housing crisis we find ourselves in, they exacerbate the highs and lows rather than providing a path to market equilibrium.
“With lockdown easing, have we missed an opportunity to take a long and hard look at how to fix our broken housing market whilst we had pressed the pause button on the wider UK economy?”
While the housing market is seeing a new-found confidence among many buyers and sellers, this is simply not the case for a large proportion of aspiring homeowners across the UK, according to Nigel Purves, CEO of Wayhome.
Purves commented: “Even with the stamp duty extension for an extra three months spurring on hopeful home buyers, there are many who find themselves overlooked and ignored due to their household income not meeting a mortgage lender’s criteria. This is despite them already having a deposit saved and being able to afford the equivalent of mortgage repayments in rent each month.
“More needs to be done to level the playing field and provide people with alternative routes into home ownership.”
Tahir Farooqui, CEO of Canopy, said: “Just as buyer demand was beginning to cool, the housing market has once again been kicked into life. Early March saw the extension of the stamp duty holiday, causing a fresh wave of demand from people looking for new home and hoping to benefit from slashed costs. This is however causing an artificial inflation of house prices across the UK as sellers seize the opportunity to up asking prices and buyers compete for available homes in a rampant market.
“As a result, it’s all too easy for hopeful first-time buyers to fall behind in the race. While 95% mortgages will be reintroduced this month, the problem remains that hopeful homeowners need to be considered creditworthy enough to secure a suitable mortgage in the first place. And in a competitive market, this is even more difficult.
“With the average renter plugging nearly £64k into the cycle of renting before they can finally save up to buy their first home, it is essential the monthly payments are taken into account for their credit score. Behaviours such as rent tracking should become the norm, aiding Generation Rent from the get-go, rather than continuing to put hurdles in their way.”
In the months ahead, Rich Horner, head of individual protection at MetLife, expects to see a “surge in homeownership”, particularly as the new 95% mortgage scheme comes into play.
He said: “Thanks to the chancellor’s extension of the stamp duty holiday, and the introduction of the 95% mortgage scheme, it’s been another positive month for the housing sector. One that could have suffered severely had the stamp duty holiday ended abruptly.”
Comments (3)
I am with you Mr May, having been in that 1988 market and personally selling four properties a week consistently for a year, only to go on holiday for a fortnight and come back to be told the branch sold two properties with four sales people in 14-days, I know that a super hot market can be switched off. But, the BoE base rate was 13%, 33-years ago, not the 0.1% it is today. We did not have Help to buy etc, and in 1988 there were 2 million completions, unlike now – where we still see 1.1M as the annual figure for the past 7 years or so, so maybe the market will stay fair to buoyant for a while yet as there has not been a massive uptick.
In fact if you look at the size of growth of the population in the last decade – a static completion rate actually tells us that there just are not enough properties to buy or rent.
Add in the amount of people WFH and needing to move to do that away from their ‘annoying’ neighbours, or to get out of flats and into houses with gardens, and you have new dynamics in the marketplace that never existed pre-covid. Lastly, for richer or for poorer we are out of the EU (on paper anyway), unlike 1988 when we were very much in. So that may too have ripples for the real estate industry.
I’m not sure that I agree with Anthony Coddling.
Everyone I speak to is desperate to unleash their savings, spend, socialise, and improve their lives after a torrid period of restricted activity. Consumer spending breeds confidence and confidence breeds more confidence.
Added to this, Boris will be highly creative with schemes to fuel home ownership. I have a feeling we’re going to see a very active 2 to 3 years.
What are they going to buy? Artificially stimulating the market has already created more sales than completions, its a massive game of musical chairs where there are apparently about 150,000 properties too few.
Ultra low interest rates have meant properties the previously had to be sold to finance a purchase can be retained and enjoy an uplift in value that far outstrips the cost of financing it’s retention.
Buy to let income yields are strong and consistent plus there is capital growth- Section 24 hasn’t scared people out of BTL, even 40% tax on an un-mortgaged property still gives a better net income than most annuities, plus there’s capital growth
Deceased estate properties are bing retained,
People are bringing forward their purchases of retire to homes away from the City
All this demand is great for rising prices but unless someone is emigrating, going into rented accommodation, dying or buying new or otherwise ending a chain it is easily possible that multiple chains are all reliant on 1 stopper node to complete the chain
I’m not being deliberately pessimistic but experience of spring 1988 to spring 1995 provides an insight how a very buoyant market can be frustrated by it’s own success.
Sale agreed isn’t sold.